Gold fell towards $4,320 an ounce on Tuesday as renewed strength in oil and Treasury yields reinforced expectations that US interest rates may need to remain restrictive for longer.

Spot gold dropped about 0.6% to $4,319.39, extending Monday’s decline and moving back towards an important technical support zone. US gold futures fell to around $4,356.

The retreat came after an early Asian rebound faded as investors absorbed increasingly hawkish Federal Reserve commentary and a renewed rise in crude prices.

Fed officials are keeping another hike firmly alive

The biggest obstacle for bullion remains monetary policy.

St Louis Fed President Alberto Musalem said further rate increases are likely to be needed because inflation remains too high and demand has stayed resilient.

He argued that acting earlier through incremental tightening could reduce the risk that policymakers later need a more disruptive response.

Chicago Fed President Austan Goolsbee has also hardened his tone.

The Financial Times reported that he sees a need for an aggressive, front-loaded response if persistent inflation is being driven by strong demand and AI-related investment rather than temporary supply disruptions.

The dollar index held around 100.46, close to its recent seven-week high, adding another headwind for dollar-denominated gold.

That combination has weakened the argument that September’s quarter-point Fed hike was a one-off adjustment.

Oil rebound removes some of Monday’s relief

Gold also lost one of its short-term supports as crude prices turned higher again.

Brent rose about 1.7% towards $102 a barrel after four consecutive sessions of losses, while WTI also rebounded as traders watched possible US-Iran talks at the UN General Assembly and renewed Middle East supply disruptions.

The US 10-year Treasury yield consequently climbed about 2 basis points to 4.98% in European trading, reversing part of Monday’s bond rally.

TD Securities analyst Ryan McKay told The Business Times that gold had shown impressive resilience after the Fed’s hawkish rate hike, helped by falling energy prices and a supportive broader precious-metals backdrop.

But Tuesday’s oil rebound shows why that support can quickly disappear.

Longer-term demand remains firmer. Gold-backed ETFs have attracted roughly 50 tonnes of inflows so far in September, putting holdings on course for a third consecutive monthly increase.

Gold is now testing a critical technical floor

The latest decline has pushed bullion directly towards its 100-day moving average near $4,318, making the $4,300-$4,320 area the most important near-term support zone.

Momentum remains weak rather than decisively bearish. The daily RSI is near its neutral 50 level and MACD remains close to zero, suggesting neither side has established control.

A sustained break below $4,318 would expose the recent low around $4,255 and potentially the post-Fed support region near $4,235.

On the upside, gold first needs to reclaim roughly $4,340-$4,350. The much larger hurdle remains $4,395-$4,410, where repeated attempts to break $4,400 have failed.

A clean move above that region would reopen $4,500 and then roughly $4,540.

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